Tourism Supply Chain

With reference to the supply of, and demand for, tourism, identify the different supply sectors as well as the different tourism markets and discuss the interconnections that exist in the tourism supply chain.

Aiming to discuss the interconnections in the tourism supply chain, the first part of this essay focuses on the supply and demand side of the tourism industry. The second part is then, based on the points outlined in the previous part, intended to show how the supply and demand sides work together. Particular attention is being paid to the role and significance of intermediaries in developing and providing the tourism product.

Before examining the various components of tourism supply and tourism demand, a more general consideration of the industry needs to be made. Although in the past academics have developed several definitions of tourism, its core elements can be described best through theoretical models. A widely accepted model, which uses three basic elements, was developed by Leiper in 1989 (Cooper et al. 2008). According to him, the first element includes tourists, whose characteristics and aspects will be outlined later when covering the different tourism markets. Geographical components form the second element and include the tourist-generation region, the destination and the transit route. The third element comprises the tourism sector, which is made up by the businesses contributing to deliver the tourism product as a whole. Figure 1 shows the geographical elements in more detail: Within this cyclical process, tourists travel from the tourist generating region to the destination and backwards.[pic 1]

Figure 1:

The geographical elements of a tourism system (Leiper 1989)

Regarding the supply and demand of tourism, in Figure 1 the tourist destination region and the transit region represent the supply side of the industry, whereas the tourist as a consumer represents the demand side. In essence, the tourist demands services such as transport and accommodation, which are supplied by the tourism businesses or organisations.

Brought down to a common denominator, it can be said that the movement of tourists to a destination is the core characteristic of tourism activity. A distinction can be made in terms of the different types of tourism. The World Tourism Organisation has divided tourism into three groups: domestic tourism, inbound tourism and outbound tourism (Youell 1998). On the one hand, domestics tourism involves people travelling only within their country, e.g. from Edinburgh to the Isle of Skye. On the other hand, inbound tourism and outbound tourism, also grouped as international tourism, involve travelling to another country, whereby inbound tourism involves the travelling of non-locals to a country and outbound tourism is defined by locals who travel to another country. For instance, Japanese tourists visiting the Fringe Festival in Edinburgh would be classified as inbound tourists, whereas Scottish people traveling to the Maldives would be classified as outbound tourists.

In order that tourism can be delivered as a product, services must be supplied. When examining the supply side of tourism, a very complex interaction of businesses and organisations offering different services to the customer can be ascertained. Key components of the tourism supply include transportation, accommodation and activities or attractions in the destination itself (Page et al. 2009). Transportation is not only needed to bring customers from point A to point B, but is also needed for trips within the destination. Some modes of transportation, especially in the ambit of leisure tourism, can become the main reason for travelling (Cooper et al. 2005). Cruise ships are one example where the mode of transportation is a central part of the tourist’s experience. Another example could be the renowned Orient Express, where the journey from Paris to Istanbul may be more important than the actual visit of the cities. Same as with transportation, the type of accommodation can differ significantly: From a basic hostel up to a prestigious luxury hotel, the accommodation sector offers a wide variety. The type of accommodation can either be the main purpose of reaching a destination, as in the case of a wellness resort, or accomplish a more practical purpose of simply providing food and shelter. For people who choose a basic type of accommodation, activities or attractions in the destination are usually the main push-factor for reaching a destination. For instance, when visiting a city because of a concert of a famous music group, factors such as closeness to the event venue are more important than the interior design of a room. Overall, tourism can be described as a very personal process and whether a tourist attaches more importance to the mode of transportation, to the accommodation or to the facilities provided at the destination depends primarily on his or her individual preferences.

Individuality is a key word, when it comes to describe the different tourism markets. Basically this area includes the demand side of the industry, in other words the tourists as customers. Understanding the tourist as a consumer is a crucial skill for people working in the industry. The tourists’ decision making process and the factors affecting it play an essential role for future planning and management, as well as growth and development decisions (Page et al. 2009). Travel motivators and personal influences must be kept in mind when examining tourists as customers. A common model to describe different types of tourists was developed by Plog in 1974 (Page et al. 2009). Depending on their travel preferences, Plog distinguishes three tourist types: psychocentric, allocentric and midcentric tourists. While psychocentric tourists choose familiar settings and avoid discovering new places, allocentric tourists travel on their own and prefer to explore undetected locations. Both psychocentric and allocentric tourists are rare and that is why most of the people travelling fall under the midcentric tourist type, who travels to known and already discovered destinations.

Another crucial factor for tourism suppliers is to understand motives for travelling. Travel purposes can differ significantly. Leisure travel is obviously a driving force for travelling, but as important as travelling for pleasure is business travel. In fact, travelling for business purposes makes up 30% of the whole travel industry (Cederholm n.d.). The opening up of new markets in order to be competitive in a globalised environment requires business travel on a large scale. All travel motives are also shaped by external factors, which influence tourists’ motivations to travel. These can include personal and family influences such as age, gender and family on one side and social and situational influences such social class and economical circumstances on the other side (Page et al. 2009).